Hello, and welcome to the EVERTEC Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I will now turn the conference over to Beatriz Brown-Sáenz of Investor Relations. Please go ahead, ma'am. .

Thank you, and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; and Joaquin Castrillo, our Chief Financial Officer.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report.

During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income and adjusted earnings per common share.

Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company website at www.evertecinc.com. I will now hand the call over to Mac. .

Thanks, Beatriz. I'm pleased to report very strong third quarter results that were above our expectations as we continue to execute on our initiatives across all our markets. Strength was broad-based with every one of our segments growing both revenue and EBITDA over the prior period.

We also continue to make progress on the Sinqia acquisition and hope to announce the closing of that transformational deal in the near future.

On today's call, I will start with some highlights from the quarter, and then we'll turn it over to Joaquin, who will provide further details on our third quarter results as well as an update to our expectations for the remainder of the year. Beginning on Slide 4.

Total revenue was approximately $173 million for the third quarter, an increase of approximately 19% compared to the third quarter of 2022. Adjusted EBITDA was approximately $79 million, an increase of approximately 31% when compared with the prior year quarter.

Adjusted EBITDA margin was 45.4%, approximately 410 basis points above last year's level and above our expectations and guidance. Adjusted earnings per share was $0.80, an increase of 51% from the prior year quarter's adjusted EPS of $0.53.

As a reminder, we changed our calculation of adjusted EBITDA, adjusted net income and adjusted earnings per share metrics earlier this year to exclude the impact of noncash unrealized gains and losses from foreign currency remeasurement, and all variances against prior year have been compared against recast figures.

We generated operating cash flow of $163 million, and we returned approximately $33 million to our shareholders through dividends and share repurchases. Additionally, our liquidity remains strong at approximately $366 million as of September 30. Moving on to our business update on Slide 5. In Puerto Rico, we experienced growth across all our segments.

Merchant Acquiring revenue was up approximately 10% year-over-year, driven by strong sales volume and an increase in our overall spread. Payments Puerto Rico was up approximately 16%, reflecting strong POS transaction volumes and continued strength in ATH Movil business.

Our Business Solutions segment revenue was up approximately 15%, primarily due to the impact in the prior year of the onetime credit granted to Popular upon closing of the Popular transaction. Excluding this impact, Business Solutions revenue grew approximately 2%.

As a reminder, this is the first quarter where we are not facing a year-over-year growth headwind due to the impact of the assets sold to Popular. Business Solutions growth also benefited from certain onetime hardware and software sales completed in the quarter. Turning to the macro environment in Puerto Rico.

The overall backdrop remains stable with a few signs of optimism this past quarter. The overall level of unemployment has remained fairly stable through 2023, though the unemployment rate did tick up to 6.2% in July. This is still near the lowest level in decades.

Inflation seems to be coming down more rapidly on the island with a reading of just 2.2% in July, and the economic activity index was up 3.5% year-over-year.

Travel and tourism trends continue to be positive, with total airline passengers recording year-over-year growth in the mid-20s, and year-to-date growth is now 20% year-over-year through September. Auto sales have also rebounded in recent months, up 40% year-over-year in September and 9% in August, after being flat to down for most of the year.

In sum, we continue to view the macroeconomic environment as supported for EVERTEC's growth. Moving to Latin America on Slide 6. Revenue was up an impressive 37% year-over-year.

As we have indicated previously, our relationship with Getnet Chile has been an important driver of growth over the past few years and this quarter is no different as we now expect to exceed contract minimums, which led to the recognition of a $6.3 million revenue catch-up adjustment, which Joaquin will explain further.

The segment also benefited from the paySmart acquisition completed in the first quarter of this year and organic growth aligned to our expectations. Our customers in the region delivered strong contributions to growth in the quarter and the broad-based strength we are seeing provides confidence in our LatAm growth strategy.

As a reminder, we lapped the benefit of the BBR acquisition completed in the third quarter last year. In regards to the Sinqia acquisition, we previously announced that we received Sinqia shareholder approval, an important milestone towards closing and expect to complete the transaction before year-end.

We are currently working with the Sinqia team on integration and growth plans and are excited with the opportunity ahead in Brazil. We expect to be able to provide a more detailed update of our plans and expectations for Sinqia on our fourth quarter earnings call.

In sum, this was another strong quarter that reflects our ability to deliver organic growth while also working to complete the biggest acquisition in the company's history. I want to thank the teams that worked so hard this past quarter to deliver these outstanding results.

With that, I'll now turn it over to Joaquin to provide a more in-depth look at our third quarter results and our increased outlook for 2023. .

Thank you, Mac, and good afternoon, everyone. Turning to Slide 8, you will see the consolidated third quarter results for EVERTEC.

As a reminder, in the first quarter this year, we made a change to our calculation of adjusted EBITDA, adjusted net income and adjusted EPS to exclude the effects of noncash unrealized gains and losses from foreign currency remeasurement and prior period numbers have been recast to conform to the current period presentation.

Total revenue for the third quarter was $173.2 million, up approximately 19% compared to $145.8 million in the prior year, as all of our business segments performed above our expectations.

Revenue growth was primarily driven by strong sales volume and transaction volumes, the recognition of a $6.3 million catch-up adjustment related to our Getnet Chile relationship and the impact in the prior year of the onetime credit granted to Popular upon closing of the Popular transaction.

Adjusted EBITDA for the quarter was $78.7 million, an increase of approximately $18.5 million or 31% when compared to the prior year quarter.

The increase in adjusted EBITDA was driven by the increase in revenue, partially offset by an increase in operating expenses as we had higher personnel costs and an increase in professional fees, driven by corporate development initiatives and cloud services, partially offset by recoveries of previously recorded operational losses.

Adjusted EBITDA margin was approximately 45.4%, an approximate 410 basis points increase compared to the prior year quarter. The increase in margin reflects leverage from the revenue upside mainly the Getnet Chile catch-up, which flows completely through EBITDA.

Additionally, prior year margin was negatively impacted by the onetime credit granted to Popular upon closing of the Popular transaction. Adjusted net income for the quarter was $52.4 million, an increase of 47% compared to $35.6 million in the prior year.

Our adjusted effective tax rate in the quarter was 15.3% and aligned to the lower end of our expectations. We now expect the tax rate for the full year to be approximately 16%.

Adjusted EPS was $0.80 for the quarter, an increase of approximately 51% compared to the prior year, driven by the increase in adjusted net income and a reduced share count due to our repurchase activity. Moving on to Slide 9. I'll now cover our segment results, starting with Merchant Acquiring.

In the third quarter, Merchant Acquiring net revenue increased approximately 10% year-over-year to approximately $40.6 million. This increase was driven by a combination of increased sales volume, an increase in overall spread and the continued benefit of certain pricing initiatives.

Sales volume growth was strong throughout the quarter as we saw back-to-school seasonality and new merchant adds that are contributing positively to revenues. But September was the strongest month of the prior year quarter was impacted by Hurricane Fiona, which disrupted spending patterns in the last 2 weeks of the quarter.

Adjusted EBITDA for the segment was $15.3 million, up approximately 10% and adjusted EBITDA margin was 37.7% and consistent with the prior year quarter. The margin benefited from higher revenues, offset by higher processing costs given the growth in transactions and lower average ticket.

On Slide 10, you will see the results for the Payment Services Puerto Rico and the Caribbean segment. Revenue for the segment in the third quarter was $51.6 million, up approximately 16%, driven by strong transaction growth and continued performance from our ATH Movil business.

POS transactions were up 10% from the prior year, an acceleration from recent quarters and aligned to the performance we are seeing in our Merchant Acquiring segment, including the impact from Hurricane Fiona in the last 2 weeks of September in the prior year.

ATH Movil growth overall was 24% as we saw strong transaction growth in the person-to-person side as well as steady growth on the business side, which continues to drive most of the revenue from ATH Movil.

The segment also continues to benefit from increases in transaction processing and monitoring revenue recognized for services provided to the Payment Services Latin America segment. Adjusted EBITDA for the segment was $30.4 million, up approximately 21% as compared to last year.

Adjusted EBITDA margin was 58.8%, up approximately 260 basis points compared to last year. Margin benefited from the leverage of strong revenue and the positive net effect in the quarter of recoveries of previously recorded operational losses. On Slide 11, you will see the results of our Payment Services LatAm segment.

Revenue for the segment in the third quarter was $46.2 million, up approximately 37% as compared to last year and 35% on a constant currency basis. The major driver of growth in the quarter was the recognition of approximately $6.3 million catch-up adjustment related to our Getnet Chile contract.

Given Getnet volumes have continued to grow as of this quarter, we now expect contract minimums will be surpassed before the end of the agreement, which requires us to adjust revenue recognized to date as well as the monthly revenue to be recognized throughout the remaining life of the contract.

We are not expecting another similar adjustment at this time, although we will continue to monitor the performance of this contract on a quarterly basis. LatAm segment revenues also benefited from the paySmart acquisition completed at the beginning of the year as well as from organic growth.

Adjusted EBITDA for the segment was $17.5 million and adjusted EBITDA margin was 37.9%, up approximately 550 basis points compared to last year. The higher margin was primarily a result of the $6.3 million catch-up, which contributed approximately 980 basis points of margin.

This was partially offset by higher personnel costs, in part driven by foreign currency exchange rates and an increase in transaction processing and monitoring expenses charged from the Payments Puerto Rico segment. On Slide 12, you will find the results for the Business Solutions segment.

Business Solutions revenue for the third quarter was up approximately 15% to $56.5 million as prior year revenue was impacted by the $6.3 million onetime credit that was part of the Popular transaction.

Excluding this impact, revenue growth in the segment would have been 2%, primarily driven by $1 million hardware and software sale completed in the quarter. For the quarter, adjusted EBITDA was $21.1 million, and adjusted EBITDA margin was 37.4%, up approximately 440 basis points as compared to the third quarter last year.

The adjusted EBITDA margin increase was mainly driven by the increase in revenue, partially offset by higher operating expenses, including higher equipment and infrastructure expenses. Moving on to Slide 13. You will see a summary of Corporate and Other.

Our third quarter adjusted EBITDA was a negative $5.6 million, a decrease of approximately 6% compared to prior year. Our adjusted EBITDA as a percentage of total revenue was 3.2%, benefiting from the higher revenue. Moving on to our cash flow overview on Slide 14.

Our beginning cash balance was approximately $203.7 million, including restricted cash of approximately $18.7 million. Net cash provided by operating activities year-to-date was approximately $163.5 million, an increase of approximately $4 million compared to prior year as we continue to effectively manage working capital.

We closed on the paySmart acquisition in the first quarter for approximately $23 million, acquired equity investments of approximately $32 million, driven by the acquisition of Sinqia shares ahead of the shareholder vote and had capital expenditures of approximately $50.6 million.

We made net debt payments of $29.6 million, including payments made to the outstanding balance on our revolving credit facility and $6 million in withholding taxes on share-based compensation, which resulted in a total net debt decrease of approximately $35.5 million.

We paid cash dividends of $9.7 million and we repurchased approximately 665,000 shares of common stock at an average price of $35.49 for a total of approximately $23.6 million year-to-date. We expanded and extended our repurchase program last quarter and still have approximately $150 million available for future use through December 31, 2024.

We also announced another $0.05 dividend to be paid on December 1, 2023, to shareholders of record as of October 30, 2023. Our ending cash balance, excluding cash included in settlement assets as of September 30 was $198.4 million, and this included approximately $20.6 million of restricted cash. Moving to Slide 15.

You'll find a summary of our debt as of September 30. Our quarter ending net debt position was approximately $237.7 million, comprised of approximately $177.8 million of unrestricted cash and approximately $415.5 million of total short-term borrowings and long-term debt. Our weighted average interest rate was 5.48%.

Our net debt to trailing 12-month adjusted EBITDA was approximately 0.9x. As of September 30, total liquidity was approximately $365.8 million. This balance excludes restricted cash and includes the available borrowing capacity under our revolver. Moving to Slide 16.

I will now provide you with an update to our 2023 outlook as well as some items to consider for 2024.

We are pleased with the continued strong growth in both Puerto Rico and Latin America, and given our Q3 results and additional visibility, we are raising our guidance and now expect revenue to be in a range of $663 million to $667 million, representing growth of 7% to 7.9%.

We expect adjusted EBITDA margin to range between 43% to 43.5%, considering a lower margin in the fourth quarter as we continue to invest in our businesses more actively through the end of the year and execute on specific corporate initiatives that will result in increased CapEx.

We are increasing our adjusted earnings per share outlook to $2.81 to $2.86, representing growth of 11% to 13% as compared to the adjusted earnings per share in 2022 of $2.53. On a GAAP basis, earnings per share is anticipated to be between $1.69 to $1.75. We expect our non-GAAP effective tax rate to be closer to 16%.

We have not considered any additional share repurchases or any potential impacts from the Sinqia acquisition as part of this outlook. Turning to 2024. While we are not prepared to give guidance, I would like to comment on a few items that are notable.

Overall, the Puerto Rico economy continues to reflect a stable outlook, and the effect of disaster recovery funds, although coming in at a slow pace, are expected to continue impacting the economy positively.

Specifically, as we look at our segments, the Merchant Acquiring segment has benefited from pricing initiatives implemented last year that we have now mostly lapped as well as consumer strength that was above expectations, mainly in the first half of the year. We also had positive growth in 2023, given the impact from Hurricane Fiona last year.

As we look into 2024, we will not benefit from these tailwinds, and as such, expect some moderation in our top line growth when compared to 2023. Our Payments Puerto Rico segment also benefited from some of the trends observed in Merchant Acquiring throughout 2023, and as such, expect a similar level of moderation as we look at 2024.

In the case of our Latin America segment, the $6.3 million catch-up we recognized this quarter related to Getnet Chile will be a headwind going into next year. Additionally, we benefited from the tailwinds of acquisitions that we have now lapped such as BBR and the acquisition of paySmart, which we anniversary in early Q1.

Lastly, the CPI index for September was announced earlier this month and was 3.7%. As a reminder, our MSA with Banco Popular caps our annual increase to 1.5% and our ATH processing agreement caps our annual increase to 5%. In summary, we are pleased with the strong results in Q3 and the trends we see in the business.

We are very excited about the combination of EVERTEC and Sinqia and look forward to providing more detail on Sinqia's expected 2024 impact during our fourth quarter results. We hope to see some of you in person at upcoming conferences in the coming months. Operator, please go ahead and open the line for questions. .

[Operator Instructions] And the first question comes from Vasu Govil with KBW. .

It was really a strong quarter, really strong revenue performance. And even if I sort of exclude the couple of onetime factors you called out, it was still -- I think I'm estimating low double-digit revenue growth.

So Mac in looking like what surprised you to the upside versus your expectation? And then what sort of making you expect sort of a meaningful deceleration in the fourth quarter? I mean is there still some conservatism in the guide? Or is some moving factors we should be mindful of?.

No, I mean, look, certainly, Puerto Rico payments surprised us in terms of some of the strength that we saw coming from sales volume on both transactions. As we said, obviously, we do have somewhat of a benefit in this quarter because last year, the second half of September was impacted by Fiona, and we can certainly see that in the numbers.

Going to Q4, yes, I mean we're always balanced in how we are approaching the whole year. I think we've always given a full year and not necessarily a quarterly guidance.

So we think we're taking into consideration some of the trends that we've been seeing, but certainly a little bit of a deceleration considering that it's been so strong in the third quarter. .

And just a quick follow-up. As you probably are aware, the Fed sort of came out with a proposal yesterday to lower the debit interchange caps.

Could you remind us how much of your debit volume goes on the Visa MasterCard networks? And do you expect that to be a tailwind to you guys if you were able to tack on some pricing on the top of that?.

So we haven't broken out what -- how much goes through Visa MasterCard, but we have said, right, that most of the volume that we see in Puerto Rico is debit. So that would certainly have an effect. And we've also mentioned that a lot of our pricing is bundled.

But I think it's a little bit early to really kind of gauge how much of an impact this could have. In the past, we obviously went through Durbin.

And when we went through Durbin, there were certainly movements depending on the clients and the sophistication behind those clients, where they also wanted to get some of the benefit that acquirers were getting. So I think it's a little bit early, but it's certainly positive. .

And the next question comes from John Davis with Raymond James. .

Just actually wanted to follow up a little bit on Vasu's question around just kind of bigger picture revenue growth, 10% this quarter going to low singles, but for the full year, still going to be healthy and quite a bit quicker than you've historically grown once you make all the adjustments.

So Mac, how do you think about pre-Sinqia and post Sinqia, you can talk about the normalized growth rate of the business? Is this a mid-single digits? Is it higher? What are the puts and takes? I feel like there's been so many moving pieces over the last 4 or 5 years, whether it's hurricanes or COVID.

Just to trying to understand what the normalized growth rate is here. .

Yes. Yes, John, happy to try and answer that. So as you know, we don't give long-term guidance, and we've been very careful. And given, to your point, the complexity of our business. I think we've all been sort of surprised at the resiliency of the U.S. economy and the consumer.

And we've also been very pleased with our execution, right? We've rolled out ATH Movil additional features. We've been able to grab market share here and keep our customers. Outside of Puerto Rico, our customers have exceeded their expectations.

So if you look at Mercado Libre, you look at Santander, Getnet, they're beating their projections using our technology. So we feel like, look, no company is perfect, but we feel like we've executed well. We've grown our market share, and we've kept our customers. Going forward, it's hard to predict.

And when the next call, we'll give you guidance for next year. But things could decelerate as people anticipate, but we're not giving you guidance for next year. But we have been pleased with what we've been able to accomplish this year. .

Okay. And then just a follow-up. I know you haven't closed Sinqia yet, but we're, let's call it, 3 months into the process of -- I know you can't officially integrate until it's done, but conversations.

Curious, what are you more excited about today, whether it's a cross-sell opportunity, cost savings? Just maybe an update on thinking now that you've been kind of in the process with these guys for 3 months now. .

Sure. Yes. Look, I've spent a lot of time in Sao Paulo since we announced this deal. And we're still incredibly excited about it, right? I mean this is -- first, it's a known company in Brazil that has a great reputation. They've been public for 10 years, strong sell-side coverage.

Auditors or Deloitte, they've got a great reputation with their customers. We walked you through a while back, who their customers are and their different segments. Out of the gate, we're going to be really focused on how do they continue to execute well and then how do we help accelerate growth.

So when we look at synergies, which weren't baked into sort of the rationale of the deal when we talk about it's going to be accretive next year even without. But we are going to focus on growth. So we will focus first on payment. So the ability to sell our payments products in Brazil across their base is going to be a priority for us.

As you may know, iFood, which is that Uber or the DoorDash of Brazil, the #1 food delivery company, already issued 700,000 cards using our platform. Alelo is already a customer. So we already have some products that are ready and available and that are localized to the market that we can start selling.

Additionally, we can localize some of the products that we have like place to pay or our acquiring module if that demand presents itself with their customers as well. So selling products using the strength they have, the leadership team they have, the commercial relationships, we're incredibly excited about.

And then exporting their products, right? I mean they're digital products, they have a great onboarding solution. They have a great automated collection solution.

So we're going to look through all of their different products, whether it's on their digital services or one of their industry-specific products to see which of those we can export over time and the quickest. We're still doing the work up to determine that. So we're excited. We think that this is going to be some good revenue synergies.

And over time, there will be cost savings, but that's not going to be our priority. But we do think over time, just like we've done with other acquisitions, if you look at our margins in our LatAm segment, we've made acquisitions, we've held margins together.

We do think that we'll be able to share development teams to potentially share some of our infrastructure over time. But we're going to do it very deliberately in a way that doesn't prohibit sort of -- or detract from our agility and our growth. .

Okay. And last one for me, just again another Sinqia question. They've been successful by in large part, their ability to acquire companies, integrate that and grow the business.

Do you plan to continue to enable them to do that to deploy capital in Brazil? Do you think that's kind of be your focus kind of going forward moving into Brazil? Just thoughts on -- that they've been successful doing a lot of M&A, and I would assume you're going to continue to do that, but just any thoughts there. .

Yes. So we will. So they have a very -- we spent time with the M&A team, their methodology. They've done a great job acquiring 24 companies over the last several years. That team will stay intact because they have very -- they're very deep into the market. They have relationships with entrepreneurs. They have relationships with companies.

They have a pipeline. So we will continue to work with them to focus on Brazilian targets, and we bring capital that they didn't have in the past, right, given our current capability and given the cash that we throw off. However, we're not going to focus just on Brazil.

Alberta is very focused on looking throughout the region, looking into other markets. So we will focus on Brazil for sure, but we'll continue to look across the region. .

And the next question comes from Nate Svensson with Deutsche Bank. .

Great results. Happy to see the print. I was wondering if you could give a little more color about the contractual minimums with Getnet that you think you're going to bust.

So maybe can you talk about some of the drivers that are pushing you above that? Is this sort of growth at Getnet that has exceeded expectations? Is it efforts from EVERTEC? Is it macro? And then I guess maybe more broadly, sort of what portion of your book of business has contractual terms similar to what you have at Getnet? I know earlier you talked about Santander exceeding expectations.

So I guess a little more color on what drove the Getnet performance above expectations and then how that applies to the rest of your book of business?.

Yes. So this is Mac. I'll take sort of strategically how we think about this, and then I'll hand it to Joaquin, if he wants to provide more details.

Look, one of the things that we are proud of is that the team has -- we've made acquisitions, we bought some good technology and then we've localized it in specific countries to take advantage of opportunities. But when we did that, we would match it against a real commercial opportunity.

We didn't -- we don't necessarily localize and wait for them to come, we actually localize it when there's demand. So with some of the contracts, particularly when it was a significant build, we would put minimums in place to ensure they didn't necessarily want to pay big implementation fees.

So we put minimums in place to ensure that we could recover our investment and not be wholly dependent on their success selling the product and that type of thing. So we have built some contracts in that manner, and this was one of the larger ones. So it's played out very well and they have been incredibly successful.

They have over 150,000 merchants up. We believe they've been the most successful to challenge Transbank. But not only have they been successful in that we're recovering our investment and a good return on top, they're blowing through it.

And that's what you're seeing this quarter is a multi-quarter catch-up, right? So this isn't stuff that just occurred in this quarter. We're catching up for multiple quarters because the combination of both of our efforts have exceeded both of our expectations. .

Got it. That's super helpful color. And then another comment I wanted a little clarification on. So Joaquin, you mentioned that EBITDA margins in the fourth quarter are going to be lower to increased investments in the business and resulting in higher OpEx.

So maybe you could give a little more color on what those specific investments are, what OpEx line items you're going to see the increases and then sort of what the sort of long-term strategic rationale for those investments are?.

I mean I think that in this case, we're kind of highlighting very specific projects that are coming into play. I would say, mainly in the professional lines, professional fees, pipeline and cloud services.

We are continuously looking at our infrastructure, looking for ways to be more efficient to bring our technology to a next level, and just timing-wise some of those will fall into the fourth quarter.

Plus we have some very specific corporate initiatives that we are doing mainly across Latin America as we continue to look at different markets and evaluate different ways of entering Brazil, et cetera, that will also fall into the fourth quarter. .

The next question comes from Bob Napoli with William Blair. .

I guess another question on Sinqia. Just since this is a new business for you, how do you think about Sinqia's tech stack relative to competition? There's a lot of innovation in the bank tech space.

And I think Sinqia is doing a cloud transition to the cloud, but just any thoughts around the challenges and opportunities and how that tech stack compares to the competition. .

Yes. So Bob, what I would tell you is, look, Sinqia is acquired, like we said, 24 assets over the last decade. And then they also have a legacy business that was sort of the genesis of the company. They've done an incredibly good job, and we sort of interviewed the marketplace, interviewed competitors, interviewed ex employees.

They did a good job providing good service, providing good technology to their customers. But they have built product road maps, and they have got to move some of the more stuff to the cloud, right? They're in this journey. They're not finished with it.

So just like most companies that have been around for a while, they're still migrating some stuff to the cloud. They're still going along that journey. And they're still on some of their platforms, determining which one they're going to decommission which one they're going to keep. So they are still along that journey.

But I think they're executing it well. But that is something that we will help them focus on and make sure that they execute and that they're able to make the migration that they've set out to accomplish. .

And then maybe some color on the sales activity in Latin America, just the pipeline, what you're seeing there?.

Bob, this is Joaquin. I mean I think as we've said before, the organic side of the business continues to perform very well. Obviously, is a result of some of the products and the investments that we've been making over time.

I think Santander and what we just reported is a perfect example of how the investments that we made originally when we acquired the Chile asset then all the investments we did to convert that into a processing platform are actually now giving very good results. And that's driving the pipeline as well.

I mean this type of performance certainly brings others to take a look and participate. So we're certainly continuing to take advantage of that. .

What's also interesting, Bob, is as we've acquired these different assets and localized in different countries and then become more, I guess, of experts and how do we commercialize these and sell them.

We're beginning to find opportunities where we can bundle these products, right? So if you take 1 of our wallet solutions, you take 1 of our risk management solutions, you take 1 of our issuing solutions, can you put those together and offer unique solutions? So we feel good about the pipeline.

We're continuing to sell in the things we do business in. But now that we have a broader set of products, we're becoming a more interesting solution to customers in these markets. .

[Operator Instructions] And the next question comes from James Faucette with Morgan Stanley. .

Just quickly following up on Sinqia. Anything that you can share in terms of key to do still to get past, whether it be from a regulatory perspective or other issues like that? Just trying to make sure that we understand what the roadmaps is here still to get that closed. .

To get -- I mean, the big thing was the shareholder approval, right? So we've got that behind us. We're still working through small issues, but we're still focused on the close and feel good about getting this deal flows. But the big issue for us was the shareholder approval. That was the long pull on the top. .

Got it. Got it. Got it. And then when you think about next year, I think you kind of really appreciate you calling out the grow-over challenges from this year into next year, et cetera.

But what are the things that you're watching from a macro perspective besides just like inflation rates coming down probably a little bit faster at least in Puerto Rico than I had anticipated? And anything else that we should be aware of that could move things around?.

James, this is Joaquin.

I mean, look, as I said, I think that for what it's worth in Puerto Rico, we continue to expect a stable backdrop as we said in 1 of the other questions that we got, I think we've all been surprised by the strength of the consumer and how that's got reflected in, let's say, sales volume and transactions, even though we're kind of way past some of these very specific funds that were hitting people's bank accounts.

It seems like reconstruction is starting to have, let's say, an undertone in the performance of the Puerto Rico economy, not hugely significant to the point where we can kind of pinpoint, but there's certainly more activity and that's why we feel that on a go-forward basis, it will be stable in Puerto Rico.

And in Latin America, obviously, we have multiple countries that we're tracking in terms of potential effects. But given the type of services that we're providing outside of Puerto Rico, it is really more driven by the pipeline and being able to execute and deliver on time for those clients.

So I'd say that at a high level, that's kind of our macro what we're always considering. .

And the next question comes from Jamie Friedman with Susquehanna. .

Let me echo the congratulations. Joaquin, when I do the math on the implications for the Q4 though, I'm getting a decel down to the low single digits. And I think you made some comments specifically about September in your prepared remarks.

I was just hoping you could kind of help unpack if the slowdown is of that magnitude, why it would be? And if you could repeat what you said about September. .

Yes. So September of last year, the second half of September was impacted by Hurricane Fiona. We had a hurricane that came through. And we saw -- and actually, we called out when we had the Q3 call, and there was slowdown in the last 2 weeks of last year.

And that certainly was a positive in the rollover this year, both in Merchant Acquiring and in Payments Puerto Rico. So as we go into Q4, obviously, we won't have that benefit, number one. Also, when you look at the growth rate in this quarter, we have Santander, which is big in the Latin America segment.

And then in Business Solutions, we have the grow-over from last year, given the CPI effect, which was another $6 million in the previous year. So the Business Solutions segment, once we get into the next quarter will be in the low single digit, which is what we've expected, right? So those are the main drivers.

And then obviously, just a little bit of a slowdown in the overall trending payments just given what we're coming off of. .

Okay. And then, Mac, I think that you or Joaquin had alluded to some pricing opportunities in Merchants. I was wondering if you could kind of elaborate on that.

What if you could share the magnitude or how you're thinking at least strategically of that price?.

Actually, Jamie, what we called out is that we're going to be lapping a lot of those now going into Q4, which is actually another driver that's going into how we're looking at the fourth quarter. So Q3 also benefited from some of those pricing initiatives that we actually put in place last year, and that has been a tailwind.

As we've said previously, pricing initiatives in a broader sense where we're kind of impacting the whole portfolio. It's something that we don't do all the time. That's what we've called this one out.

We are, however, always looking at different segments of the portfolio, different verticals within the portfolio where the different dynamics or types of cards or mix is impacting profitability and we'll go in and adjust. And those are a lot more subtle to the overall results, but it's something that we're always doing.

In this case, what we're calling out is we're going to lap an effect of pricing initiatives that impacted pretty much the whole portfolio last year, and we benefited from that throughout. .

And this does conclude the question-and-answer session. I would like to turn the call to Mac Schuessler for any closing comments. .

Again, we'd like everyone -- to thank everyone for joining us tonight for the call. And we look forward to seeing you in upcoming conferences. Goodbye. .

Thank you. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines..